Children’s Place (PLCE) operates as a children's specialty apparel retailer for children from newborn to twelve years of age.The company sells apparel, accessories, footwear, and other items for children; and designs, contracts to manufacture, and sells merchandise under the proprietary The Children's Place, Place, and Baby Place brand names. The company was founded in 1969, is based in Secaucus, New Jersey and has 3,500 employees. The stock is Zacks Rank #1 (Strong Buy) and todays Bull of the Day.
Children’s Place has a market cap of $2 billion with a forward PE of 20. The stock sports Zacks Style Scores of “A” in both Momentum and Growth, but “B” in Value. The company resides in an industry that is ranked 100 out of 265 (Top 38%) in the Zacks Industry Rank.
The company reported Q3 earnings last week, sending the stock soaring higher. Investors must now ask themselves if there is more room for the stock to continue higher.
Q1 Earnings and Guidance
On November 17th PLCE released its third quarter earnings with a 14% beat. The company reported $2.29 verse the $2.03 expected. Revenue came in at $473.8 million verse the $460 million expected. Gross margins year over year ticked higher to 41% from 39.6%, while same store sales came in at 4.6%.
In addition to the earnings beat, the company raised guidance for the fourth quarter. They now see a range of $1.43-1.48 verse the $1.40 expected. They also raised fiscal year 2016 to $5.00-5.05 verse the $4.73 expected.
Headed into earnings the stock was already in full blown bounce mode. After the election, the stock ran from $75 to $90 in just over a week. After the numbers came out, it jumped another 14 points to $104. A total move of 38% just since the election. While some investors have missed a lot of the move already, any pullbacks should be considered, as estimates for the company continue to rise higher.
Since earnings, estimates have ticked higher across all time frames. For fiscal 2017, estimates have come up over 8% over the last 7 days, going from $4.70 to $5.08. For the 2018, there has been an 8% jump as well, from $5.62 to $5.19. Earnings will next be reported in March, where the company will go for its twentieth straight beat.
Will they ever miss again?
Children’s Place hasn’t missed on EPS since early 2012. This impressive streak of 19 straight beats has led to the stock more then doubling since their last miss. The next earnings date is March 21st and investors should look for more of the same from the hot stock.
The 50-day moving average is currently around $80. Look for this to rise quickly as the stock trades over the $100 level. If there is a pullback in the stock keep an eye on the 50-day as a good level to for a starter position.
Retail hasn’t been in favor in 2016, but some companies are finding their niche and separating themselves from older retail names. Children’s Place has done just that and a result is one of the strongest stocks out there. Investors should be patient and look at any pullback as a buying opportunity for the long-term.
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